Bankers slam transaction tax plans

| 17/08/2011

(Reuters): Banks criticized Franco-German plans for a tax on financial transactions,saying they will jeopardize economic growth and distort markets, as the British, Dutch and Swedish governments distanced themselves from the proposals. “The financial-services industry should not be seen as an additional source of tax revenue but as an essential part of a stable and sustainable economy,” said the Association for Financial Markets in Europe. A “tax would be a brake on economic growth,” it said in a statement.

Lenders would pass on the cost of the levy to customers in the same way they already transfer the cost of UK Stamp Duty on share purchases to clients, Brian Mairs, a spokesman for the British Bankers’ Association, a London-based lobby, said today. A tax would only work if implemented globally or it would trigger “distortions” in financial markets, Mairs said.

The British government, which oversees Europe’s biggest financial centre, is preparing to clash with its French and German counterparts over the levy, which would be applied in all 27 European Union countries. Finance chiefs failed to agree on a transactions tax in September 2010, amid opposition from nations including the U.K. The Swedish and Dutch governments also said today that they oppose the plans. EU taxation proposals require unanimous support from the bloc’s 27 governments to become law.

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